The franc is the only European currency to have actually gone up in value against the euro. Other have either been stable (because their central banks pursue a fixed exchange rate policy) or have fallen in value against the euro, often dramatically.

The Swiss National Bank is no longer the relative hard money central bank that it used to be, which is why I recently stopped being bullish on the franc. Yesterday's announcement makes the case even stronger for a bearish view.

One good thing about this is that it could reduce the problems that many Austrian and other Western European banks have in Eastern Europe. One source of the problems was that many in Eastern Europe borrowed in terms of francs, and so when it rose sharply against the Eastern European currencies, the debt burden for the borrowers soared. The franc had already fallen some 5% from its highs against the Polish zloty, and today it then fell another 3%, reducing the debt burden for Poles that borrowed in francs by 3% at the same time.

3 Comments:

I don't have any opinion on the NOK (I haven't analyzed it) right now, but I remain bullish on SEK versus both EUR and CHF, though slightly less so than before, because the SEK has risen some 3.5% against the EUR and 5% against the USD since I recommended it two weeks ago.

Isn't the history of the CHF as a hard currency related to legislation which forced the central bank of Switzerland to hold a certain fraction of their monies in reserve as gold? Legislation which were abandonded around year 2000, whereafter there's no reason to consider the CHF to be a hard currency anymore.

Obviously so, since they can now make the decision to suddenly weaken their currency as they have done! They couldn't do that before, because they couldn't produce gold out of nothingness.

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